MNC Skyvision launches IPO of up to $200 million

Four anchor investors, including US- and Malaysia-based media specialists, help to ensure the base deal is covered on day one.
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Indonesia is one of the most underpenetrated markets in the world for pay-TV (AFP)
<div style="text-align: left;"> Indonesia is one of the most underpenetrated markets in the world for pay-TV (AFP) </div>

MNC Skyvision, an Indonesian pay-TV operator owned by media group Global Mediacom, kicked off the institutional bookbuilding yesterday for an initial public offering that is aiming to raise between Rp1.6 trillion and Rp1.9 trillion ($170 million to $200 million).

The deal is a play on Indonesia’s strong consumer demand story and comes as stock markets in Asia rose after the election results in Greece eased worries about the eurozone crisis. Jakarta’s benchmark share index opened yesterday at almost exactly the same level as it started the year, but closed 1.1% higher.

Bankers started investor education for the transaction during the first week of May. MNC Skyvision is offering 1.1 billion shares at a price ranging from Rp1,460 to Rp1,750 per share, sources said. Of the total, 77% are primary shares, while the remaining 23% are secondary shares to be sold by Bhakti Investama, which currently owns 20% of the company. The base deal represents about 16% the enlarged capital.

The deal also comes with an upsize option of an additional 312 million shares, which could increase the total deal size to as much as $260 million.

Feedback from investors has been strong and the base deal was fully covered on the first day of bookbuilding, one of the sources said yesterday. The early demand includes four anchor investors, although there was no information on how much of the deal they are taking. Two of the anchors are media specialists — one based in the US and the other one in Malaysia — while the other two are capital markets investors, the person said.

If successful, this will be the biggest IPO in Indonesia this year, even before any exercise of the upsize option. So far, five companies have raised a combined $125 million through their offerings, according to Bloomberg data.

Global Mediacom, which is the biggest and only integrated media group in Indonesia, currently owns 75.5% of MNC Skyvision, while Bhakti Investama has a 20% stake and other minority and individual shareholders own 4.5%, the source said.

According to the current timetable, the order book is expected to close on Friday night US time, and the final price is expected to be fixed by June 25. The listing is scheduled for July 9.

The price range values the company at a 2013 enterprise value-to-Ebitda multiple of 7.9 times to 9.2 times, according to the syndicate average. The company does not have any close comparables, as it will be the only listed pay-TV operator in Indonesia. But as a reference, other Asia-Pacific pay-TV operators trade at an average 2013 EV/Ebitda multiple of around 8.6.

MNC Skyvision is the dominating pay-TV operator in Indonesia, which is one of the most underpenetrated markets in the world for pay-TV. This suggests that the company will continue to grow at a rapid pace, which should be attractive to investors, the sources said. MNC Skyvision has a domestic market share of about 70%.

Helped by robust consumer demand, Indonesia has also seen steady economic growth in recent years. In 2011, the economy grew by 6.5%, supported by strong private consumption, and it is expected to grow by between 6.3% and 6.7% this year.

“The main source of the growth is expected to come from domestic demand as investment activity gains momentum, owing to stronger economic fundamentals and improved business climate,” the governor of Bank Indonesia, Darmin Nasution, said earlier this year in a speech that is published on the bank’s website.

Established in 1988, MNC Skyvision started to market its satellite-based pay-TV service in early 1994 under the Indovision brand name. It has more than 58 branch offices throughout the Indonesian archipelago, according to its website.

J.P. Morgan and Morgan Stanley are joint global coordinators, while Danareksa Sekuritas and MNC Securities are handling the domestic portion of the deal.

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